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What Is Accelerated Death Benefit?
Life insurance plans will provide your beneficiaries with a financial payment upon your death, but there are times when you really need the funds before you actually pass away.
With accelerated death benefit, you can enjoy those benefits while you are still alive.
Accelerated death benefits are not available with every life insurance plan. If you have these benefits, your plan will have a specific death benefits rider or provision in the contract. How they work vary from one policy to the next, but they will be specified in your contract if you have these benefits.
A Set Percentage
One thing your policy will clarify is what percentage of your term benefits can be withdrawn before your death. It generally ranges between 25 and 95 percent of your death benefits, and the balance will be paid out upon your death. If you have a policy for $300,000 and take 50 percent of that through accelerated benefits, then your heirs will only receive $150,000 upon your death.
You cannot claim benefits early because you want to pay off bills or go on a vacation. You must meet certain criteria for the company to approve your request. In general, customers must have a terminal illness with a life expectancy of two years or less, an acute illness that will drastically shorten your life without treatment, or an illness that requires extraordinary treatment like an organ transplant. If you are put in a nursing home, then you may be able to use these benefits to cover your long-term care expenses.
Accelerated death benefit are a nice feature to have in a life insurance contract, but you should take care before claiming the benefits. They are not always the right choice. Upon further review of your situation, you may decide that the benefits won’t help you that much right now and you would rather save them for your beneficiaries.
Consider how they affect your survivors, and ask yourself if there is a better way to cover the costs. Finally, look at how collecting the benefits may affect your Medicaid eligibility. Weigh all options and the consequences before making this very important decision.
To compare accelerated death benefit rates, fill out our quote request form on the right or call us at 1-888-773-1181
We can help you to find the right choice for you and your loved ones.